Builders Lament Senior Housing Interest
February 2nd, 2009
- Reverse mortgages & over–55 housing
- Senior Equity Falls, Trillions Remain
- U.S. Home Sales Rise in November
- Crystal Ball Time
- Should falling home prices keep you from getting a reverse loan?
I have always been interested in the subject of housing for those age-55 and above. Some people like such housing, some don’t, but at least now it’s a viable option for those who prefer an environment with fewer young folks.
In a curious way, adult housing is both doing well and doing badly, according to new information from the National Association of Home Builders.
NAHB’s newest index of builder sentiment, new 55+ Housing Market Index tracks the confidence levels of builders serving senior buyers on the basis of three factors: present sale conditions, expectations for the next six months and traffic by prospective single-family home buyers in the 55+ market. Under the NAHB’s system, a mark of 50 shows some balance in the marketplace between positive and negative builder views.
Okay, so what do builders think of the current senior market? Not a bunch, the 55+ Housing Market Index is now at 18, a woeful figure, something careening to the bottom of the barrel.
The components of the 55+ Housing Market Index look like this:
___ Present sales conditions — 17
___ Expectations for the next six months — 24
___ Traffic in the 55+ market — 9
“Our customers are usually in a good position to buy homes because they have spent years accumulating wealth–building up and the equity in their current homes and establishing good credit,” explained Joanne (Jo) Theunissen, immediate past chair of the NAHB 50+ Housing Council and a builder from Michigan. “But in the current market, they can’t find buyers for their existing homes and many are delaying their retirements all together.”
Well, 18 is hardly 50 on the NAHB index so how could it possibly be seen in a positive light?
The NAHB also has a measure which it has computed and compiled for a far-longer period, the NAHB/Wells Fargo Housing Market Index. In December that index was at 9.
In other words, senior housing — what builders call “service-enriched communities” — is the bright spot in a new-home environment which is generally woeful.
What the NAHB index reflects, I think, is housing, but also something more, the general unease and outright losses suffered by much of the population during the past year to 18 months.
It’s tough to buy a new home when you worry that prices may fall further, and it’s hard to plan financially when assets accumulated over a lifetime in retirement accounts are being eroded by failures on Wall Street — and galling when you consider that a lot of those failures continue to get whooping bonuses.
Alternatively, seniors can now use a reverse mortgage to buy a prime residence, a new concept which ought to help the home builders rise somewhat from their misery.